- GBP / JPY faced rejection near 151.00 and lost nearly 100 pips from multi-day highs.
- Concerns about the rapidly expanding Delta variant benefited the safe haven JPY and put pressure.
- The sharp pullback suggests that the recent bounce from the month-long lows may have lost steam.
The crossing GBP/JPY updated daily lows and the bears are now pointing to a sustained break below the key psychological level of 150.00.
The cross built on the strong positive move the day before and witnessed some subsequent buying during the first half of trading action on Tuesday. This propelled the GBP / JPY cross to multi-day highs, although the bulls struggled to capitalize on the move and faced rejection near 151.00.
Markets remain concerned about the fast-spreading Delta variant of the coronavirus and its impact on the global economic recovery. This, in turn, acted as a tailwind for traditional safe-haven currencies, including the Japanese yen, which was seen as a key factor that sparked further selling around the GBP / JPY cross.
Meanwhile, the revival in safe-haven demand provided a modest boost to the US dollar and put pressure on the British pound. This further contributed to the GBP / JPY intraday retracement of nearly 100 pips. With the last leg down, the cross has now stalled its recent rebound from the month-long lows touched last Friday.
In the absence of major market-moving economic releases, the developments surrounding the coronavirus saga will continue to play a key role in driving broader market risk sentiment. This will influence the demand for the safe haven JPY and produce some short-term trading opportunities around the GBP / JPY cross.
Technical levels
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